MG Rover was in upbeat mood today, when it unveiled smaller than expected losses of £254m for the eight months, since the "English patient" was sold by Germany's BMW for £10. The loss was less than the £300m deficit some had earlier feared.
With £329m cash at the end of last year, MG Rover is banking on profits next year. That was certainly the view of Tony Woodley, national officer of the Transport and General Workers union (TGWU), who believed that the company was on track to return to profitability.
"Critics within the industry and the media have been confounded by the company's performance. TGWU members at Longbridge have played their part and will continue to do so, because we know the challenges the company still faces to return to profit," he said.
Despite MG Rover's optimistic noises, the odds of survival are slim. Figures last week underlined MG Rover's predicament. According to the Society of Motor Manufacturers and Traders, MG Rover continued to report declining market share - down from 3.94% to 3.21%. In the first year-on-year comparison since it was acquired by the Phoenix consortium - led by the former Rover executive, John Towers - MG Rover saw registrations fall by 9.23%.
The first six months of the year saw its British registrations down by 26.5%, to 47,641 vehicles. MG Rover insisted its sales were in line with its business plan, but the trend is worrying, especially as Britain has continued to defy signs of a slowdown in other big European car markets. Britain saw an 11.4% rise in car registrations, achieving record sales of 214,325 units in June.
While MG Rover experienced declining market share, carmakers with a significant manufacturing presence in Britain, such as Ford, Vauxhall, Nissan, Peugeot, Honda and Toyota, all enjoyed sales growth. That bodes ill for MG Rover, despite its Houdini-like capacity for survival.
MG Rover hopes to ensure its survival by producing an average of 200,000 units a year over the next five years. The figure for this year is likely to reach only 180,000, but the 2002 total is expected to exceed 200,000.
The company has introduced an estate version of its top-of-the-range Rover 75 saloon and is also bringing out four new MG sports models, including a super MG - the X80 - next year. One big challenge is to design a medium-sized car to replace the ageing Rover 45.
As MG Rover seeks to improve its fortunes, the strong pound, which has decimated British manufacturing, has done the company few favours. Motor industry executives warned last week that Britain's wait-and-see approach to the European single currency could jeopardise future investment in the sector. An industry seminar on the future of British car-making at Downing Street last week identified euro-membership as a vital step to ensure survival. If that is indeed the case, the odds are truly stacked against MG Rover, a small fish competing against much larger rivals.
Related articles
09.05.2000: The Rover crisis explained
12.04.2001: Rover 'on track' despite heavy losses
27.10.2000: Two directors quit MG Rover board
22.10.2000: Rover left in the slow lane
18.10.2000: BMW delivers twin blow to Rover
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